Abstract
This paper investigates the determinants of legal change in a public choice framework. An empirical model explaining the timing and probability of decisions to adopt state-operated lotteries is developed. Employing a Tobit estimator and explicitly considering the effects of state-specific constitutional and political structures, spending and tax policies, and federal revenue importation, evidence is presented showing that legal change is much like economic change: Lotteries are more likely to be adopted and to be adopted earlier where the costs are lowest relative to expected benefits. State legislatures appear to be the main beneficiaries of this public choice process.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Amemiya, T. (1985).Advanced econometrics. Cambridge, MA: Harvard University Press.
Borg, M.O. and Mason, P.M. (1988). The budgetary incidence of a lottery to support education.National Tax Journal 41 (March): 75–85.
Brinner, R.E. and Clotfelter, C.T. (1975). An economic appraisal of state lotteries.National Tax Journal 28 (December): 395–404.
Carlson, E. (1988). Will lotteries win the heart of the South?The Wall Street Journal (20 September): 39.
Clotfelter, C.T. (1979). On the regressivity of state-operated numbers games.National Tax Journal 32 (December): 543–548.
Clotfelter, C.T. and Cook, P.J. (1987). Implicit taxation in lottery finance.National Tax Journal 40 (December): 533–546.
Clotfelter, C.T. and Cook, P.J. (1989).Selling hope: State lotteries in America. Cambridge, MA: Harvard University Press.
Filer, J.E., Moak, D.L. and Uze, B. (1988). Why some states adopt lotteries and others don't.Public Finance Quarterly 16 (July): 259–283.
Gray, V. (1973). Innovation in the states: A diffusion study.American Political Science Review 67 (December): 1174–1185.
Greene, W.H. (1990).Econometric analysis. New York: Macmillan.
Griliches, Z. (1957). Hybrid corn: An exploration in the economics of technological change.Econometrica 25 (October): 501–522.
Hersch, P.L. and McDougall, G.S. (1988). Do people put their money where their votes are? The case of lottery tickets.Southern Economic Journal 56 (July): 32–38.
Hersch, P.L. and Netter, J.M. (1989). State prohibition of alcohol: An application of diffusion analysis to regulation. In R.O. Zerbe, Jr. (Ed.),Research in law and economics, Vol. 12, 55–70. Greenwich, CT: JAI Press.
Judge, G.C., Hill, C.R., Griffiths, W.E., Lütkepohl, H. and Lee, T.-C. (1982).Introduction to the theory and practice of econometrics. New York: Wiley.
Lindsay, C.M. and Maloney, M.T. (1988). Party politics and the price of payola.Economic Inquiry 26 (April): 203–221.
Maddala, G. (1983).Limited dependent and qualitative variables in econometrics. Cambridge: Cambridge University Press.
Mansfield, E. (1968).The economics of technological change. New York: Norton.
Martin, R. and Yandle, B. (1990). State lotteries as duopoly transfer mechanisms.Public Choice 64 (March): 253–264.
McCormick, R.E. and Tollison, R.D. (1981).Politicians, legislation, and the economy: An inquiry into the interest-group theory of government. Boston: Martinus Nijhoff.
McDonald, J.F. and Moffitt, R.A. (1980). The uses of Tobit analysis.Review of Economics and Statistics 62 (May): 318–321.
Peltzman, S. (1976). Toward a more general theory of regulation.Journal of Law and Economics 19 (August): 211–244.
Price, J. and Yandle, B. (1987). Labor markets and Sunday closing laws.Journal of Labor Research 8 (Fall): 407–414.
Shughart, W.F. II and Tollison, R.D. (1985). Corporate chartering: An exploration into the economics of legal change.Economic Inquiry 23 (October): 585–599.
Stigler, G.J. (1971). The theory of economic regulation.Bell Journal of Economics 2 (Spring): 3–21.
Tobin, J. (1958). Estimation of relationship for limited dependent variables.Econometrica 26 (January): 24–36.
Walker, J. (1969). The diffusion of innovations among the American states.American Political Science Review 63 (September): 880–899.
Data sources
Council of Economic Advisers. (1987 and other various years of issue).Economic report of the President. Washington DC: U.S. Government Printing Office.
The Council of State Government. (1986 and other various years of issue).The book of the states 1986–1987. Vol. 26. Lexington, KY: Council of State Governments.
FYI Information Services. (1984).The new book of American rankings. New York: Facts on File Publications.
Judge, C.S. (1979).The book of American rankings. New York: Facts on File Publications.
U.S. Department of Commerce, Bureau of the Census. (1988 and other various years of issue).Public employment in 1986. Washington, DC: U.S. Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. (1988 and other various years of issue).State government finances in 1986. Washington, DC: U.S. Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. (1987 and other various years of issue).Statistical abstract of the United States: 1987 107th ed. Washington, DC: U.S. Government Printing Office.
U.S. Department of Commerce, Bureau of Economic Analysis. (1982).Survey of current business, Vol. 62 (August). Washington, DC: U.S. Government Printing Office.
U.S. Department of Commerce, Bureau of Economic Analysis. (1987).Survey of current business, Vol. 67 (August). Washington, DC: U.S. Government Printing Office.
Author information
Authors and Affiliations
Additional information
We are especially indebted to Tim Sass for many helpful suggestions. Roger Folsom, Thomas Husted, Lydia Ortega, Robert Tollison, and an anonymous referee also provided useful comments. Saurman gratefully acknowledges financial support from the College of Social Sciences at San Jose University. Any remaining errors are our own.
Rights and permissions
About this article
Cite this article
Jackson, J.D., Saurman, D.S. & Shughart, W.F. Instant winners: Legal change in transition and the diffusion of state lotteries. Public Choice 80, 245–263 (1994). https://doi.org/10.1007/BF01053219
Accepted:
Issue Date:
DOI: https://doi.org/10.1007/BF01053219